Merger She Wrote

Work in three acts: our players fret about being acquired, wrestle with their roles, and decide whether to be stars — or to make their exits.

By
Cheryl Dahle

The Scene: A Paris café in late November 1998.

Dramatis Personae:Daniele Bovio, 41, manager of America Online's operations in France, and Mary Foley, a 10-year veteran of AOL and head of corporate training. Foley, 34, who's been vacationing in Europe and hasn't read a newspaper in days, expects to enjoy a leisurely lunch while getting tourist tips from her colleague. But that is not to be the case.

Bovio: Have you heard the news?

Foley: What's up?

Bovio: We acquired Netscape yesterday.

Foley: Wow, what a great move. I remember when we were dogging it out in the marketplace. Now it's like we're taking over the world.

Bovio: True, but we've got a rough road ahead of us.

(Foley's excitement fizzles. She endured AOL's acquisition of Compuserve, and she knows the drill: She'll be pulled into HR meetings to discuss downsizing in other departments. Some longtime friends will get pink slips. She might even get one herself.)

Foley: You know, you're right. I'm not at all looking forward to dealing with the weeks of anxiety, waiting for both good news and bad.

This scene is not only real, but it's also being played out repeatedly across the globe as a result of such megamergers as Ford and Volvo, Chrysler and Daimler-Benz, Bell Atlantic and GTE, Fleet National Bank and BankBoston. Many of these merger-induced dramas end badly, however: According to Mitchell Marks, 43, a San Francisco - based organizational psychologist and merger expert, about three-quarters of mergers and acquisitions fail to produce their intended result.

For people like Foley, a merger or acquisition is a nerve-racking plotline that can leave careers and self-confidence in shambles. Does it have to be this way? Can any of us survive a merger without enduring an emotional melodrama? Marks thinks we can.

For 15 years, Marks has consulted in more than 60 mergers involving high-tech organizations, health-care corporations, banks, and consumer-products companies. Based on those experiences, he has written two books: From Turmoil to Triumph: New Life After Mergers, Acquisitions, and Downsizing (Lexington Books, 1994) and, with co-author Philip H. Mirvis, "Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions, and Alliances" (Jossey-Bass, 1998). The only thing that surprises Marks about the world of M&As is that people are still surprised at how hard mergers are on people.

"People get stressed about losing control," says Marks. "If you leave your company to pursue another opportunity, you pull the trigger; it's your choice to make the jump. But if some large enterprise buys you, you lose that control — or at least that's the assumption."

The trick, Marks says, is to look past that assumption and understand which parts — both onstage and off — you can direct. In an interview with Fast Company, Marks shared his insights into how to play your part in a mandatory casting call for merged employees. Consider him the playwright who's trying to rewrite a better ending for the drama, The Merger.

ACT I : Pre-Merger Jitters

Scene One: Where smart players discover that their work life may not be in jeopardy.

Most people overreact when they hear that their company is tying the corporate knot with a longtime suitor. "I once worked with a blue-chip manufacturer that got acquired," Marks recalls. "The first rumor hit within a day: Three-thousand people were going to be laid off at headquarters — which was pretty strange, since only 1,000 people worked at headquarters. People just assume the worst."

Take control by reframing the situation, advises Marks. Just as your company is going through a big-time change, a merger is a natural time for you to consider a radical change of your own. Ignore for the moment that your company is merging. Ask yourself, "If I were to make any change in my career, what would it be?" Marks says that many people respond by saying, "I would leave my current job."

Mary Foley did just that. She'd been struggling to get her master's degree in organization development from Pepperdine University while working part-time at AOL. When the Netscape deal was announced, she decided that the timing was right for her to leave AOL and commit herself fully to graduate school.

"I was already having trouble maintaining the intensity I wanted to at work," Foley says. "I wanted to give more, but I couldn't. And that wasn't very satisfying. And I knew that going through a major acquisition would be a huge emotional investment. I kept wondering whether I had the energy to do that again." In the end, Foley decided that she didn't. "I made a gut decision — and I haven't regretted it. I had to accept that I couldn't work full-time and go to graduate school."

But that doesn't mean you should bail at the first whisper of a merger. You might have a better opportunity to reinvent your career in the new organization. At the same time, you shouldn't act as if your employment is assured. "Mergers give you permission to take risks," says Marks. "You can let yourself feel like a victim, or you can turn this change into a great opportunity."

Scene Two: Where the players wonder, "Are we all doomed?"

Develop a backup plan just in case you decide to exit quickly from this drama, Marks advises. Make a list of your contacts and your options. Whom would you call? What company would you pursue? Then decide on your breaking point — the one thing that would cause you to walk away. Are you willing to forego that raise you'd been promised, in return for greater autonomy?

"Figure out what matters to you," says Marks. "Fewer than 1% of the people I've worked with have bothered to write down the critical things that would make them leave or stay," says Marks. "They just cut and run. That's dangerous, because the company you run to might also be about to merge."

Michele Nivens, 42, knew what mattered to her when her company, BBN, an Internet-service provider and technology-research center in Cambridge, Massachusetts, was purchased in 1997 by GTE, the telecommunications giant. Nivens, who was vice president of human resources for BBN's systems and technologies division, enjoyed reporting to the president of her division, as opposed to a corporate HR director. She felt that her personal relationships with the techies in the 1,500-person division made her a better business partner.

As it turned out, the GTE deal did result in Nivens's having to report to corporate HR in Dallas. "My impact on the company would have diminished," she says, "because I'd have had to deal with a centralized HR department that was hundreds of miles away." So she made the difficult decision to leave BBN and become vice president of HR at Software.com. "I had to give up working with a team I really liked. But staying on wouldn't have been the right career move."

That kind of option-weighing is essential. "People get so caught up in their emotions, they lose sight of the compromises they'll have to make," Marks says. "You rarely have to choose between a perfect job and a lousy job. You make trade-offs based on what's changed and what you really value."

ACT II: The Real Action Begins

Scene One: Where the main characters begin to create one company out of two.

The most stressful part of any merger is waiting for the next scene's script. Who's been cut from the plot? Who are the new players? Senior executives won't have all the answers, but Marks suggests that you approach them aggressively. "Try to get on the transition team, if there is one. Ask your boss directly for information. Whatever you do, don't assume anything."

Nivens found that her backstage role with the BBN transition team helped her to feel that she was in control of her career. She saw the merger unfold in real time, and she had a hand in shaping it. Her job was to assess how the culture would change for BBNers if the company accepted GTE's offer. She was also involved in a question-and-answer forum on BBN's intranet that answered employees' concerns about the merger.

"We tried to be very responsive," Nivens says. "But I could see that, two or three levels out, people worried that they weren't getting all the information. Because I was close to the action, I wasn't concerned about being taken by surprise."

Scene Two: Where the players look for omens that the merger is doomed.

When a merger is still unfolding and the final scene has not yet been written, you have a choice: Either keep your name on the dressing-room door, or bolt before the final curtain.

In many cases, clues that the merger was a mistake aren't exactly subtle. Marks describes a transition-team meeting between a high-tech company and its newly acquired, slightly smaller company. The team from the smaller group interpreted the deal as a merger of equals, and they came to the meeting ready to suggest how the companies could adopt each other's best practices. But the lead company saw the deal as an acquisition, not a merger.

"The team from the smaller company had started working through its ideas," Marks recalls, "when suddenly the team leader from the other side began yelling, 'Apparently, you've been misinformed about something: We're in charge here.' News of his outburst got back to both companies, and that set the tone for the entire operation."

Then again, leaders in merger situations often flub their lines or miss their cues. As long as people own up to them, honest mistakes rarely bring down the whole show, says Marks. "Midcourse corrections often signal that the lead team is flexible. Any merger will hit some rough patches. It's up to individuals to consider the context of mistakes as much as to consider the mistakes themselves."

ACT III: Getting Down to Business

Now comes the drama's central conflict: Two cultures collide. The most difficult stage of any merger begins when both companies actually start working together, Marks says. All the cultural norms that employees had taken for granted — rituals for running meetings, tactics for resolving differences — are exposed and often discarded by the incoming company.

"If you've included cultural issues on your list of what matters to you, you now have a sense of whether you can withstand the changes," Marks says. "Can you cope with losing your team — in return for a better boss? Can you give up some autonomy — in return for greater support?"

There were big cultural differences between fast-moving BBN and button-down GTE. The differences took some getting used to, says David Campbell, 57, an ex-BBNer who is now president of GTE Technology Organization. GTE wanted more detailed budget projections than Campbell had ever prepared for BBN. Launching new research projects now required approval from several layers of bureaucracy. But on the flip side, GTE had the money to take BBN to the next level.

"GTE poured a billion dollars into growing the Internet side of the business," Campbell says. "BBN never could have done that on its own." While longtime BBNers chafed at the new formality of the GTE culture, they were jazzed by the prospect of doing the kinds of projects that previously they had only talked about.

Scene Two: Where the players deal with change — or are overwhelmed by it.

A merger or an acquisition is never easy, even when the two companies are made for each other, says Randy MacDonald, 50, GTE's executive vice president of human resources and administration. "It takes years for the two cultures to integrate fully. We acquired a company named Contel in 1991, and it's been only in the past year that the Contel people who came on board as a result of that deal have stopped referring to themselves as 'ex-Cons.' "

In the case of BBN, its loss of autonomy became a big source of friction. "BBNers were used to being part of a stand-alone company," MacDonald says. "Then they realized that they had to get approval on every big decision they made. Suddenly, they were accountable to someone else."

Despite the turbulence, MacDonald says the BBN acquisition was one of the most successful that GTE has ever managed. "For GTE, that acquisition was all about talent. BBN had the expertise; we had the capital. We worked hard to keep BBN people on board — and for the most part, we succeeded. But it was not a walk in the park. No acquisition is."

Epilogue

Even years after a deal, you might still be adjusting to the changes.

While that's a daunting thought, it's also something that we'll all have to cope with, says Mitchell Marks. "If you haven't gone through a merger or acquisition already, you almost certainly will before your career is through."

Cheryl Dahle (cdahle@fastcompany.com) is a senior writer at Fast Company.

Action Item: What's Your Motivation?

Mergers are just like the rest of life's upheavals — death, divorce, layoffs: They're all hell to live through. But because those events all have very similar effects on people, you don't need merger-specific coping tactics. Instead, check out William Bridges's classic book, "Transitions: Making Sense of Life's Changes" (Perseus Books, 1980). It provides a broad yet thorough look at how people can successfully deal with traumatic change. Consultants and HR trainers alike have used the book during many mergers.

Coordinates: $14. Perseus Books, www.perseusbooks.com

Sidebar: Cues for your Exit

Organizational-development expert Mitchell Marks has been called in to do postmortems on dozens of failed mergers. Here is his list of warning signs to look for during a merger or acquisition. If any of these pops up, consider bowing out.

Flailing teams "Much of the future company's tone is set by the transition teams," says Marks. "If you're getting signals that people on these teams are playing politics, that's going to carry over into the new organization. Mismatched expectations usually cause infighting. Acquirers sometimes try to portray deals as mergers of equals, when all they really intend to do is come in and take over. In those cases, transition teams are a farce."

Deep denial "You should be concerned if all you're hearing from leadership is that the merger is 'business as usual, everything is okay.' Mergers are never business as usual. The best acquirers are realistic. They say, 'Things will work out, but it's going to be a bumpy road between here and there.' Expect the senior team to level with you."

Lights out on communicating "You'll never feel like you're getting enough information. But if there's no communication, that's a very bad sign. One failed merger I evaluated had a real macho culture: The executives' attitude was that a merger's success hinged on getting the work done. Wrong. Success hinges on people getting the work done. And people don't perform well when they're kept in the dark.

Coordinates: Mitchell Marks, mitchlm@aol.com

Sidebar: That's a Wrap

A merger marks the end of your company as you had known it — and the beginning of a whole new adventure. The faster you make the break with your company's past, the sooner you start contributing to its future. Jeff Janer knows that firsthand.

Janer, 43, was formerly president and CEO of Larry Miller Productions, a marketing-communications firm in Boston. (He's since joined fidelity.com.) At the height of last fall's merger frenzy, iXL, an Internet business-solutions firm acquired both LMP and Spinners, an Internet technology company. Then iXL merged its two acquisitions to create iXL's Boston office.

Though the merger made business sense, many of LMP 's veterans feared that the company they'd helped create would disappear. No one had more of a reason to mourn than Janer. He was hired at LMP in 1980, just a year after the company was formed. He held a half-dozen positions there before becoming a senior executive. Putting LMP to rest would hurt, but Janer decided to confront those emotions head on.

The night before LMP moved into Spinner's Cambridge offices, LMP's staff threw a farewell party — for the company. "We celebrated everything we'd achieved," says Janer. "If we made a conscious break in our minds, maybe our hearts would follow. Acknowledging that we'd miss what we'd been would help us gear up to create something new."

Coordinates: Jeff Janer, jeff.janer@fmr.com

Sidebar: Happy Endings Do Happen

Your Company is undergoing a merger, and you don't like what you see: People are stressing, work is at a near standstill, and you're unsure of where you'll end up in the new organization. Think you should leave? Give yourself a few months. That's what David Campbell did.

Campbell told himself he would stay on for just six months after his company, BBN, was acquired by GTE. He was head of research for BBN's Internet division, and he wanted to make sure that his team survived the transition. After that, though, he wasn't sure whether he wanted to stick around. The culture at GTE would likely be stuffier, and he predicted that he wouldn't fit in.

But two years later he's still there, as head of GTE Technology Organization in Waltham, Massachusetts. What changed his mind? The opportunities that being part of a larger company brought.

"The bane of BBN's existence had been that we could solve these enormous technical problems, but we didn't have the resources to turn those solutions into products and bring them to market," he says. "But now we're working for a company that has those resources. A phone company is actually using the work our guys do on speech technology."

The lesson? Give your company enough time to make the inevitable mistakes and to show whether it will learn from them — or die by them. And give yourself permission to change your mind: In mergers and acquisitions, complete 180s are not at all uncommon.

Coordinates: David Campbell, david@gte.com

A version of this article appeared in the September 1999 issue of Fast Company magazine.